Wal-Mart expands FCPA probe to Brazil, China, India

Photo by Bloomberg
Employees arrange products on the shelves of a Bharti Walmart Pvt. Ltd. Best Price Modern Wholesale store in Zirakpur, on the outskirts of Chandigarh, Punjab, India.

Wal-Mart Stores Inc. has expanded its investigation of violations of the U.S. Foreign Corrupt Practices Act in Mexico to Brazil, China and India, the retailer revealed Thursday in a filing with the U.S. Securities and Exchange Commission.

The FCPA, a federal law with criminal and civil penalties jointly enforced by the U.S. Department of Justice and the SEC, punishes foreign bribery, inaccurate financial records and inadequate controls. In April, after reports it was investigating possible FCPA violations in Mexico, the Bentonville, Ark.-based retailer was hit with a shareholder lawsuit as shares fell 4.7%.

In the latest SEC filing, the company said that in addition to its Mexico investigation, it is “also conducting a voluntary global review of its policies, practices and internal controls for FCPA compliance.”

The filing said that when such allegations are reported or identified, the board of director's audit committee and the company, together with third-party advisers, “conduct inquiries and when warranted based on those inquiries open investigations. Inquiries or investigations regarding allegations of potential FCPA violations have been commenced in a number of foreign markets where we operate, including but not limited to Brazil, China and India.”

The filing said the company “has been informed by the DOJ and the SEC that it is also the subject of their respective investigations into possible violations of the FCPA” and is cooperating with these investigations.

The filing said the company “could be exposed to a variety of negative consequences” as a result of these matters, including judgments, settlements, fines, penalties, injunctions, cease-and-desist orders, debarment or other relief, criminal convictions and/or penalties, and that shareholder lawsuits may also result.

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It states the issue also could result in incurred costs in addition to the $99 million it has already spent on the matter for the nine months ended Oct. 31. It states, however, that the company “does not presently believe that these matters will have a material adverse effect on its business” although it “can provide no assurance” that will not be the case in the future.

A Wal-Mart spokesman, issued a statement Thursday that said in part: “As these matters are currently under review, it would be inappropriate for us to comment further on the specific allegations until we have concluded the investigations.

“We take compliance with the FCPA very seriously and are committed to having a strong and effective global compliance program in every country in which we operate. We will not tolerate noncompliance anywhere or at any level of the company. We are working diligently to strengthen our compliance programs and dedicating considerable resources to this effort. In fact, the company has spent more than $35 million on its global FCPA compliance review efforts over the past 18 months.”